Treasurer Josh Frydenberg releases long-awaited Retirement Income Review
Recently, National Seniors Australia welcomed Treasurer Josh Frydenberg's Retirement Income Review.
However, the document has been critiqued for lack of clear recommendation and understanding for the problems at hand. An overly complicated system is much to blame.
The report predicts the cost to the taxpayer for funding the Age Pension will decrease. The Age Pension is expected to “fall from 2.5 per cent of GDP to 2.3 per cent by 2060.”
National Seniors Chief Advocate Ian Henschke notes that while a equity in the home is a key factor in more successful retirements, a key barrier was not acknowledged.
“National Seniors has long been calling on the government to cut the interest rate for the existing Pension Loans Scheme (PLS). It’s a clear barrier.”
Mr Henschke also noted that the report didn't adequately understand why Australians may not be making better use of their savings as they age.
“Seniors tell us time and again they are petrified of running out of money. They fear the pension, health and aged care systems, which are essential components of the retirement income system won’t meet their needs. Acknowledging these fears is an important first step in reforming the retirement income system."
“If you look at aged care, for example, we are currently in the middle of the Royal Commission because, to use the Prime Minister’s own words, people have lost ‘faith’ in the aged care system.”
Mr Henschke said that the scheme "is especially important for those receiving aged care, who could be using it to live more comfortably staying in their own home and out of residential aged care.
“The PLS has seen a three-fold increase in demand but only 2,288 people used the scheme as of March 2020.
“Lowering the 4.5% interest rate should be a priority and certainly must be cut in the next Federal Budget." said Mr Henschke.
“We urge the Treasurer to recognise the vital role older Australians could play in the economy and the COVID recovery by helping them release the equity in their homes.”
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